The April 2026 deadline is fast approaching, and if you're a UK landlord earning over £50,000 annually, significant changes are coming to your tax reporting process. Making Tax Digital (MTD) for landlords replaces the traditional annual Self Assessment with quarterly digital reporting.
MTD for landlords isn't just about using new software; it fundamentally changes how you manage your tax obligations throughout the year. This guide will help you understand who must comply, when the changes take effect, what the quarterly reporting involves, and which software you'll need to make a smooth transition from Self Assessment to MTD without disrupting your property business.
Key Takeaways
MTD for landlords becomes mandatory from April 2026 for those with qualifying income over £50,000, dropping to £30,000 in 2027 and £20,000 in 2028
Qualifying income includes all rental income and self-employment income combined, but excludes employment income, pensions, and dividends
Four quarterly submissions are required by 7 August, 7 November, 7 February, and 7 May, plus a final declaration by 31 January
MTD-compatible software is mandatory for maintaining digital records and submitting returns directly to HMRC
Joint property owners must register individually if their share of income exceeds the threshold
Three-line accounts and joint property easements can simplify record-keeping for eligible landlords
Tax payment deadlines don't change—you still pay by 31 January and 31 July if applicable
What is Making Tax Digital for Landlords?
Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is a UK government initiative that modernises tax reporting for landlords. Instead of filing an annual Self Assessment return, landlords must now maintain digital records, submit quarterly updates and final declaration to HMRC through MTD recognised software.
This shift aims to improve accuracy, reduce tax evasion, and streamline the tax process by moving away from manual reporting towards real-time and digital submissions.
Who Needs to Comply with MTD for Landlords and When?
From April 2026, landlords will need to comply with Making Tax Digital, with the rollout occurring in phases based on income thresholds. The phased implementation allows landlords to gradually adapt to the new system. Here’s a breakdown of the key dates when landlords must start complying based on their annual gross income.
MTD Phased Implementation Timeline
Calculating Your Qualifying Income
Qualifying income for MTD for landlords means gross income from property rental and self-employment combined. HMRC uses the figure from your most recent tax return to determine whether you must comply.
Qualifying Income Includes | Qualifying Income Doesnot Include |
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Example: Let’s say you own two buy-to-let properties generating £35,000 annually and also work as a freelance consultant earning £20,000. Your combined qualifying income is £55,000, which means you'll need to comply with Making Tax Digital (MTD) for Landlords starting from April 2026.
Who is Exempt from MTD for Landlords?
Several groups are excluded from MTD for landlords either permanently or temporarily.
Permanent Exemptions
Digital exclusion criteria allows exemptions based on age, disability, health conditions, remote location with limited internet access, religious beliefs preventing digital tool usage, or Power of Attorney arrangements. Though, you need to apply for this exemption. This is not an automatic exemption.
Trustees and personal representatives managing property in trusts or estates are permanently exempt. This exemption is automatic, and you don't need to apply manually.
Temporary Exemptions
Property partnerships and LLPs are currently excluded with no timeline set for inclusion.
Non-resident landlords are exempt until April 2027.
Core Requirements of MTD for Landlords
Making Tax Digital for landlords creates four core obligations that completely replace the traditional Self Assessment process.
Digital Record Keeping
Under Making Tax Digital for Landlords, you must maintain digital records of all rental income and expenses using MTD-compatible software. Paper records are no longer acceptable, even if you later transcribe them digitally. Each transaction must include three key details: the amount, the date, and the category, covering everything from rental income to maintenance costs.
You can use specialist accounting software, basic bookkeeping apps, or spreadsheets to keep your records. However, if you choose to use spreadsheets, you’ll need additional bridging software to link them to HMRC’s systems for submission. All digital records must be kept for five years after the end of the tax year.
Quarterly Updates to HMRC
Under Making Tax Digital for Landlords, you'll need to submit quarterly updates to HMRC to report your rental income and expenses. These updates are not full tax returns but streamlined reports that show your property business performance over a specific period. You have two options for setting up your quarters: a standard financial quarter system or a calendar-based quarter system.
Update | Standard Quarter Period | Calendar Quarter Period | Submission Deadline |
|---|---|---|---|
Q1 | 6 April – 5 July | 1 April – 30 June | 7 August |
Q2 | 6 July – 5 October | 1 July – 30 September | 7 November |
Q3 | 6 October – 5 January | 1 October – 31 December | 7 February |
Q4 | 6 January – 5 April | 1 January – 31 March | 7 May |
Quarterly submission are cumulative, meaning each submission builds on the previous one. For example, your first update will cover the period from April to July, your second update will cover April to October, and so on. If you find an error in a previous quarter, you don’t need to resubmit that quarter—instead, you simply make correction in your next quarterly update.
Even if there are no income or expenses in the latest quarter, you still need to submit the quarterly updates, though it will be simpler when there’s zero activity.
Final Declaration (Annual Return)
After submitting your fourth quarterly update, you'll file a final declaration by 31 January following the tax year. This is your complete tax return, similar to the current Self Assessment return.
Your final declaration pulls together everything from your quarterly updates, plus income sources HMRC already holds (employment income, pensions, CIS deductions, and Capital Gains Tax residential property disposals).
You'll add:
Accounting adjustments that disallow private use elements or capital expenditure
Tax adjustments such as capital allowances and loss reliefs
Non-business income sources HMRC doesn't have (savings interest, dividends, foreign income)
Tax relief claims for pension contributions and charitable donations
MTD-Compatible Software Requirement
All software used for MTD for landlords must connect directly to HMRC's systems. Manual data entry into HMRC portals is no longer permitted. Your software must maintain digital records, submit quarterly updates directly to HMRC, and handle the end-of-year final declaration. Not all software offers complete functionality, so verify it supports both quarterly submissions and year-end returns before committing.
Simplified Record-Keeping Options for Landlords
HMRC offers several simplification options that reduce the detail landlords need to record throughout the year.
Turnover Below VAT Threshold
If your annual turnover from either self-employment or property is below the VAT threshold (£90,000), you can simplify your record-keeping by categorising income and expenses as just "income" and "expense" without further breakdowns. This means you don’t need to keep detailed records of individual transactions.
Important Note:
Residential loan interest (e.g., mortgage interest) must still be recorded separately and cannot be grouped with general expenses
Property Income and Joint Ownership
If you own property jointly with someone else, you can simplify how you report both income and expenses.
For income, you only need to record your share of the rental income each quarter
For expenses, you can report the total expense amount once per year rather than quarterly, saving you time on frequent updates
Special Scenarios for MTD for Landlords
Joint Property Ownership
When multiple people own rental property together, HMRC assumes joint owners split rental income equally unless you specify otherwise. Married couples and civil partners can file Form 17 with HMRC to declare a different split reflecting actual beneficial ownership—for instance, a 30/70 split based on respective capital contributions.
Critical point: Each joint owner must register individually for MTD for landlords if their share of income exceeds the threshold. While joint owners can use the same MTD-compatible software, they must submit separate quarterly updates reflecting their respective share of income.
Multiple Properties and Portfolio Landlords
If you own multiple properties, add up the income from all of them. It doesn't matter if income is from one small flat or a portfolio of houses, the total income determines your MTD obligations. A single MTD-compatible software package can typically manage all property types together, whether buy-to-let, commercial, or holiday lettings.
Landlords with Self-Employment Income
If you're a sole trader with property income, your self-employment income and property income are added together to determine if you exceed the MTD threshold. You must keep separate digital records for property versus business income.
Example: You have rental properties generating £35,000 annually and run a consulting business earning £18,000. Your combined income is £53,000—you must use MTD for landlords from April 2026, covering both your property and self-employment income.
Non-UK Property Income
UK-domiciled landlords must include foreign property rental income in their qualifying income calculation. Any foreign income must be reported separately from UK income through separate quarterly updates. You may be able to claim double tax relief if the income is also taxed in the country where your property is located.
Key Changes: First-Year Soft-Landing Period
The Autumn Budget 2025 confirmed that there will be a soft landing for landlords and self-employed individuals joining Making Tax Digital (MTD) in April 2026. During the first year (2026-2027), penalties for missed quarterly updates will be suspended. This means that taxpayers will not receive penalty points for failing to submit their quarterly updates on time in the first year of MTD compliance. The relief is aimed at giving landlords and businesses time to adjust to the new system of digital reporting, while also allowing software providers to onboard users more efficiently. However, this suspension does not cover late payment penalties or the annual Self-Assessment return. It only applies to quarterly update penalties during the initial transition period.
Penalties for Non-Compliance with MTD for Landlords
HMRC introduces a stricter penalty regime for MTD for landlords, emphasising the importance of submitting returns properly and on time.
Late Submission Penalties
Late Payment Penalties
Late payment penalties become proportionate with rates based on when the outstanding amount is paid. In the first year of the new penalty system, all taxpayers will receive an extra 15 days, allowing a total of 30 days to pay any outstanding tax before a late payment penalty is applied.
Late Payment Penalty Deadline
These penalties are charged in addition to interest on the outstanding amount.
Benefits of Early MTD Adoption for Landlords
Signing up for MTD for landlords early, even before you're legally required, offers several advantages:
Practice time: Learn the software and quarterly submission process without deadline pressure. When MTD for VAT was introduced, 69% of businesses reported experiencing at least one benefit, including making fewer mistakes.
Process refinement: Identify and fix any issues with your digital record-keeping or software before the mandatory dates. This prevents costly errors when compliance becomes required.
Better cash flow management: Quarterly updates provide regular estimated tax liability calculations, helping you plan payments throughout the year rather than facing a large bill in January.
Reduced errors: Year-round digital record keeping is more accurate than annual paper-based systems. You'll catch discrepancies earlier when they're easier to correct.
Improved financial visibility: Real-time access to your property business performance supports better investment decisions throughout the year.
Working with Accountants Under MTD for Landlords
You can still work with an accountant under MTD for landlords, but the relationship changes slightly. Your accountant can manage your quarterly submissions and prepare your final declaration, but you must authorise them to act on your behalf through your MTD-compatible software.
The key difference: even if your accountant handles everything, you remain ultimately responsible as the taxpayer for ensuring information is submitted correctly and on time, and for any tax due. You'll still need to review and sign the final declaration each year.
Common Mistakes to Avoid with MTD for Landlords
Waiting until April 2026 to prepare: The biggest mistake is delaying action. Selecting software, migrating records, and establishing new habits takes time. Starting now prevents last-minute panic.
Choosing incompatible software: Not all accounting software supports complete MTD functionality. Verify your chosen platform handles quarterly submissions and final declarations before committing.
Miscalculating qualifying income: Remember to include all property types and self-employment income. Missing a property or income source could mean unexpected MTD obligations.
Ignoring joint ownership rules: If you jointly own property, understand that threshold calculations use your individual share, not the property's total income. Each owner may have different MTD start dates.
Assuming limited company exemption automatically applies: If your properties are owned by a limited company, you're exempt—but only for those specific properties. Any personally owned properties still count toward your MTD threshold.
Copying and pasting between systems: MTD requires digital links between software systems. Manual copying of data isn't permitted under the regulations.
RentalBux: The Ideal MTD Solution for Landlords
RentalBux offers a user-friendly, HMRC-recognised MTD-compatible software designed specifically for landlords.
Key Features
Built by Accountants for Landlords and Sole Traders
HMRC-Approved for Making Tax Digital (MTD)
End-to-End Property and Accounting Solution
Property-Centric Accounting with Joint Ownership Support RentalBux
Pre-Built Chart of Accounts
Time-Saving Automation
Free MTD Software for Sole Traders and Landlords
User-Friendly for Non-Accountants
Conclusion
Making Tax Digital for landlords marks a major shift in property income tax reporting, moving from annual Self Assessment to quarterly digital submissions. Starting in April 2026, landlords with qualifying income over £50,000 will need to comply, requiring the selection of MTD-compatible software and the migration of records. With the first quarterly submission due in 7 August 2026, early preparation is key to avoid stress and penalties.
While the change may seem daunting, MTD offers significant benefits, such as better visibility into your property business and improved financial management. By adopting digital record-keeping and submitting quarterly updates, landlords can better plan tax payments and reduce the risk of errors.
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